- Bargaineering - http://www.bargaineering.com/articles -

IRS Ends 3% Long Distance Telephone Excise Tax

During the Spanish-American War of 1898, the government started collecting a 3% excise tax on long distance telephone calls from wealthy Americans and until recently, this 3% tax had been collected month after month after month. You might remember receiving a flier along with your bill telling you to call someone in the government about it. Well, today the Treasury Department [3] and the Internal Revenue Service [4] released press releases announcing the ending of the tax and the return of taxes paid in the last three years (since Feb. 28, 2003) plus interest.

From the Treasury Department release (text in bold is my own addition):

Key Facts Regarding Tax Refunds:

  • No immediate action is required by taxpayers.
  • Refunds will be a part of 2006 tax returns filed in 2007.
  • Refund claims will cover all excise tax paid on long-distance service over the last three years (time allowed given statute of limitations). Interest will be paid on refunds.
  • The IRS is working on a simplified method for individuals to use to claim a refund on their 2006 tax returns. (You can only claim it on this form, according to IRS Notice 2006-50)
  • Refunds will not include tax paid on local telephone service, which was not involved in the litigation.
  • Originally established in 1898 as a “luxury” tax on wealthy Americans who owned telephones, the federal excise tax on telephone calls is not compatible with today’s modern information-age society.
  • If you’re in the mood to read an IRS document, IRS Notice 2006-50 [5], has all that yummy information in nice clear simple language. Unfortunately, you will have to request a specific amount unless you paid the tax for the duration of Feb 28th 2003 until Aug 1st 2006, then you can enter the “safe harbor” amount. The safe harbor amount is just a dollar amount you can claim without having to show any supporting documentation. The actual safe harbor amount will be announced later.

    I’m sure as these results shake themselves out you will see clearer language, specification of the “safe harbor” amount, and easier forms.